Here's the scoop on credit card debt during a divorce

Credit Card debt in a Texas Divorce

If you are like most families, you have credit card debt. According to most recent data from the Survey of Consumer Finances by the U.S. Federal Reserve, the average American family has about $5,700 in credit card debt. (http://www.valuepenguin.com/average-credit-card-debt) So, what does this mean for a divorce?  Quite frankly, this is an area of the law in Texas where you may get some bad advice. Even some of the smartest attorneys I know get this area of the law wrong.

In Texas, the divorce courts divide your assets and liabilities.  A lot of times, attorneys refer to “community debt”. A community debt is just a way of saying that during the marriage, at some time, either spouse entered into a contract and became indebted.  Does that always mean that you are responsible for the debt with your spouse? Maybe, maybe not. The best way to explain this is to give some examples.

EXAMPLE 1

Credit Card Debt in Divorce

Susan is spending away at Macy’s, what is the husband liable for in the divorce?

Let’s pretend that wife, Susan, loves to shop and takes out a card at Macys. She doesn’t put her husband on the credit card. Husband, Edgar, never uses the card. He doesn’t shop at Macys and only gets his clothes from Bass Pro Shops.  In this example, the Texas courts would tend to put that debt in Mary’s column alone. That means that if she divorced, there is a strong argument for Mary to be solely responsible for this credit card debt, since it would be unfair for Edgar to have to assume that debt since he never contracted to have that debt.

EXAMPLE 2

But, let’s change the example a little bit. Let’s pretend that Edgar makes good money, but keeps Susan on an allowance. Edgar spends as much as he wants and eats steak dinners every weekend with his golf friends, but he won’t let Susan spend more than $100/month out of their joint account.  So, now Susan has to use credit cards to buy her basic necessities like food, groceries, her clothes, pay the electric bill, and buy school supplies for their kids.   If Susan needed to shop at Macy’s and charge the card up because she couldn’t clothe herself on her allowance, then I believe there is an argument to try to make Edgar responsible for some of that Macy’s debt. He probably wouldn’t end up directly liable for the debt, meaning he probably won’t end up paying Macy’s out of his pocket, but he might end up having to pay Susan directly to compensate her.  Certainly, it wasn’t fair for Susan to get a $100/month allowance while Edgar ate steak dinners and golfed with his buddies every weekend.

EXAMPLE 3

Now, let’s pretend that wife, Susan, and husband, Edgar,  each take out a joint MasterCard. They use it for everything, groceries, vacations, toys for their dogs, daycare for their kids.  Obviously, these are joint debts, used for the benefit of both parties. Here, most Texas courts are going to say that this is a joint debt and try to divide it evenly between the parties.

BOTTOM LINE?

Essentially, the bottom line from these scenarios is that if you have credit card debt, in either your name alone, or with your spouse, then you need to look at what the debts were for. If they were for necessary items like groceries, utility bills, joint vacations, or daycare, then obviously both spouses benefited from the debt and both should be liable. If one spouse had nothing to do with the debt, and the debt was not for necessary items,  then it can be argued that the spouse that was charging up the credit cards should be the one solely responsible. That scenario is the rarest. And, I am certainly not advocating to go into the credit card statements and itemize which item was for which spouse….I have seen a couple do that one time in court and it did NOT go well.  So, before you get excited about trying to get out of credit card debt, talk to your San Antonio divorce lawyer about this issue.

As an experienced San Antonio divorce attorney, I tend to see more of the third example.  Most of the time, I see spouses using credit cards for basic items and some luxury items.  Typically, the judges split the debts between the spouses, even if one of the spouses has more debt than the other.

As you can see, there is no easy answer to this question, but using these basic guidelines and talking to one of the best San Antonio divorce attorneys around, you can find out what your rights will be in the divorce. Each case is different, so make sure that you have a San Antonio divorce attorney evaluate your case.